Fraudsters Steal Bitcoins in Instawallet Cyber-Attack

Fraudsters hacked the database of Bitcoin service Instawallet, according to IDG News Service. The storing service acknowledged the security breach, but didn’t say how many bitcoins were stolen. The company also suspended the service indefinitely and plans to develop a new architecture.

“Our database was fraudulently accessed, [and] due to the very nature of Instawallet it is impossible to reopen the service as-is,” Instawallet said. “In the next few days we are going to open the claim process for Instawallet balance holders to claim the funds they had stored before the service interruption.”

The company also announced it will accept claims for individual Instawallets for the first 90 days, using the wallets’ URL and key to file the claim. Clients will then be refunded the currency value if the balance is less than 50 BTC.

Claims for online wallets holding more than 50 bitcoins “will be processed on a case by case and best efforts basis,” Instawallet said.

The breach follows a series of attacks targeting bitcoin services. In September 2012, Bitfloor has suspended all operations after a hacker stole $250,000 worth of bitcoins. In May of last year, exchange site Bitcoinica was also breached, and attackers managed to grab bitcoins valued at $90,000. After the attack, the company’s founder resigned, saying that “making money isn’t that important after all.”

Users have recently shown an ongoing interest for the virtual currency, increasing the value of a bitcoin to over US$140, the IDG News Service reports. Bitcoin is an experimental virtual currency that enables instant payments to anyone in the world. The method uses peer-to-peer technology and doesn’t operate with any central payment authority.

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Security Specialist

Bianca Stanescu, the fiercest warrior princess in the Bitdefender news palace, is a down-to-earth journalist, who’s always on to a cybertrendy story. She’s the industry news guru, who’ll always keep a close eye on the AV movers and shakers and report their deeds from a fresh new perspective. Proud mother of one, she covers parental control topics, with a view to valiantly cutting a safe path for children through the Internet thicket. She likes to let words and facts speak for themselves.